Sheridan Industries’ balance sheet at December 31, 2021, is presented below. SHERIDAN INDUSTRIES Balance Sheet December

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Sheridan Industries’ balance sheet at December 31, 2021, is
presented below.
SHERIDAN INDUSTRIES
Balance Sheet
December 31, 2021
Assets
Current Assets
Cash
$8,550
Accounts receivable
83,790
Finished goods inventory
(1,710 units)
27,360
Total current assets
119,700
Property, Plant, and Equipment
Equipment
$45,600
Less: Accumulated depreciation
11,400
34,200
Total
assets
$153,900
Liabilities and Stockholders' Equity
Liabilities
Notes payable
$28,500
Accounts payable
51,300
Total liabilities
79,800
Stockholders' Equity
Common stock
$45,600
Retained earnings
28,500
Total stockholders'
equity
74,100
Total
liabilities and stockholders' equity
$153,900
Budgeted data for the year 2022 include the following.
2022
Quarter 4
Total
Sales budget (9,800 units at $32)
Direct materials used
Direct labor
Manufacturing overhead applied
Selling and administrative expenses
To meet sales requirements and to have 2,850 units of
finished goods on hand at December 31, 2022, the production budget
shows 10,260 required units of output. The total unit
cost of production is expected to be $18. Sheridan uses
the first-in, first-out (FIFO) inventory costing method. Interest
expense is expected to be $3,990 for the year. Income taxes
are expected to be 20% of income before income taxes. In 2022, the
company expects to declare and pay an $9,120 cash
dividend.

The company’s cash budget shows an expected cash balance of
$29,992 at December 31, 2022. All sales and purchases are on
account. It is expected that 60% of quarterly sales are collected
in cash within the quarter and the remainder is collected in the
following quarter. Direct materials purchased from suppliers are
paid 50% in the quarter incurred and the remainder in the following
quarter. Purchases in the fourth quarter were the same as the
materials used. In 2022, the company expects to purchase additional
equipment costing $10,260. $4,730 of depreciation expense on
equipment is included in the budget data and split equally between
manufacturing overhead and selling and administrative
expenses. Sheridan expects to pay $9,120 on the
outstanding notes payable balance plus all interest due and payable
to December 31 (included in interest expense $3,990, above).
Accounts payable at December 31, 2022, includes amounts due
suppliers (see above) plus other accounts payable relating to
manufacturing overhead of $8,208. Unpaid income taxes at December
31 will be $5,700.
c. Prepare a retained earnings statement for 2022.